Schering Will Buy Drug Firm for $588 Million

Schering-Plough Corp. agreed Friday to buy another drug company, Key Pharmaceuticals, through an exchange of stock valued at about $588.5 million.

The companies had disclosed earlier this week that they were discussing a merger, and the terms then under consideration were the same as those approved by both companies’ directors.

The agreement calls for Schering-Plough to exchange 0.266 share of its common stock for each of Key’s 35.6 million common shares outstanding. Based on the closing price of Schering-Plough’s stock Friday, the deal is worth about $16.53 a share, or $588.5 million.

Schering-Plough’s stock fell 37.5 cents a share to $62.125 in New York Stock Exchange composite trading Friday, while Key’s stock closed unchanged at $15.75 a share on the American Stock Exchange.

Schering-Plough, based in Madison, N.J., is a major producer of prescription and over-the-counter pharmaceuticals. It also makes Maybelline cosmetics, Scholl’s foot-care products, Coppertone suntan lotion and other consumer goods. The company had 1985 sales of $1.93 billion.

Miami-based Key Pharmaceuticals, which posted $152.1 million in revenue last year, also makes prescription and over-the-counter drugs.

Its two key products, Theo-Dur and Nitro-Dur, are aimed at respiratory and cardiovascular problems, respectively.

The proposed acquisition remains subject to regulatory review and approval by both companies’ stockholders.

Key’s chairman, Phillip Frost, and its president and chief executive, Michael Jaharis Jr., who together own 32.6% of Key’s stock, agreed to vote their shares in favor of the merger, the companies said.